PATH Act Changes to ITIN Renewals Explained

Individuals whose individual taxpayer identification numbers (ITINs) will expire this year under new Code provisions may renew them starting in October, under instructions issued by the IRS (Notice 2016-48; News Release IR-2016-100). The changes to Sec. 6109 were enacted by the Protecting Americans From Tax Hikes (PATH) Act of 2015, Division Q of the Consolidated Budget Act, 2016, P.L. 114-113.

Under those provisions, ITINs issued after 2012 expire on Dec. 31 on the third consecutive tax year of nonuse, and those issued before 2013 expire on a rolling schedule based on the year they were issued. ITINs are generally used as a required identifying number for individuals who file or may be included on a tax return but are not eligible to obtain a Social Security number (SSN). They follow the same numerical format as SSNs but have fourth and fifth digits in particular ranges of numbers. An ITIN is obtained by submitting Form W-7, Application for IRS Individual Taxpayer Identification Number, with supporting documentation of identity, generally with the tax return for which it is required.

The notice said that individuals whose ITINs have not been used on a federal income tax return in the last three years or whose ITINs are expiring by the end of 2016 and who will need one to file or be included on a return may apply for renewal beginning Oct. 1. Unused ITINs not used on a federal income tax return in the last three years (covering 2013, 2014, or 2015) will no longer be valid to use on a tax return as of Jan. 1, 2017. ITIN holders in this group who need to file a tax return next year will need to renew their ITINs.

Expired ITINs

Because many ITIN holders may not know when their ITIN was issued and previously had no reason to keep a record of when it was issued, the IRS will administer the PATH Act's rolling expiration schedule for pre-2013 ITINs by a different method than that in Sec. 6109(i)(3)(C). Rather than by the year of issuance, holders of these older ITINs can tell by the number itself when it needs to be renewed. For now, ITINs with middle digits of 78 or 79 need to be renewed. The IRS will notify these holders by mail. Other older ITINs also will be identified by their middle digits and renewed according to future guidance.

How to File Form W-7

Affected individuals may file Form W-7 beginning Oct. 1 without filing a tax return, by mailing the form and supporting identification (W-7 application package) to the IRS at the address on the form or by submitting the W-7 application package at an IRS Taxpayer Assistance Center or to a community-based certified acceptance agent.

The IRS advises taxpayers to use the most recent version of the form and to check the box that indicates it is a renewal. Filers who receive a notification letter should also include a copy of it with their Form W-7.

The IRS will accept Forms W-7 from each member of a family in a single family submission starting Oct. 1, 2016, if at least one of the family members is required to renew an ITIN. For this purpose, family members include the filer, the filer's spouse, and any dependents claimed on the filer's return.

The winners of The Tax Adviser’s 2016 Best Article Award are Edward Schnee, CPA, Ph.D., and W. Eugene Seago, J.D., Ph.D., for their article, “Taxation of Worthless and Abandoned Partnership Interests.”

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